Green growth opportunities for the decarbonization goal for Chile – report available!
September 11 2020
The Institute for Structural Research (IBS) cooperated with the Ministry of Finance in Chile and the World Bank to conduct an economic analysis of the costs of Chile’s new ambitious climate change mitigation plan which would ensure carbon neutrality of the country in 2050.
The plan was put forward in April 2020 with the release of new Nationally Determined Contributions (NDC) commitment, covering mitigation actions in all sectors of the economy. Economists at IBS estimated the impact of the proposed mitigation package on the economy with the use of MEMO – a macroeconomic model of the Chilean economy. Simulations show that GDP could grow by an additional 4.4% (or 0.13 p.p. per year) up to the 2050 horizon, with the key channels being increased investment and reduced import. Private consumption would also increase, especially after 2040, and if distributed equally, would increase the welfare of citizens, driving support for mitigation actions. Most mitigation actions foreseen in the plan are profitable and the private sector should be willing to spontaneously carry them out. However, there is still a significant role for the government to ensure that no obstacles of a different nature are in the way of a green transition. If executed properly, the mitigation plan put forward by the administration will enable Chile to create green jobs, ensure sustainable growth and possibly foster green growth in the entire Latin American region.
The full report is available here.
